Business Models

1
Business Models or Who Do You Want to Be in
2001?
Tracy Weatherby Weatherby_at_activeingredient.com 650
-965-1050
2
What Business Models are Getting Funded?

• Businesses that can project profitability from a
  proven business model within a couple of years
• Monetizing your idea

3
Whats Not Getting Funded?

• Everything else

4
Models Depend on Your Business Your Market

• Software
• Hardware
• Content Community
• Marketplaces
• Services
• Support

5
Software Models Sell or license it

• By the package (i.e., shrinkwrap)
• Per processor
• Per seat
• Per organization
• Utility or transaction model pay as you go
• OEM

6
Software Models - Rent it

• Subscription (Anti-virus software)
• Pure ASP / MSP / BSP (USi, Corio,
  Applicast/Agilera, Portera)
• Monthly service fees
• With or without upfront costs
• Monthly rental of enterprise software by the
  company who makes it

7
Software Models - Give it away

• Open Source / Shareware / Freeware
• Sell the servers (Netscape Navigator, Adobe
  Acrobat)
• Advertising (Driveway.com, Homestead.com)
• Voluntary payments (McAfee)
• Sell support services (Red Hat)

8
Hardware

• Sell it
• Retail
• B2B
• Wholesale
• OEM
• Rent it or lease it
• Give it away
• Sell services or razor blades (Pitney Bowes)
• Sell subscriptions (WebTV)
• Sell advertising (Free PC)

9
Content Community

• Sell it
• Individual articles or items
• One-time fee for total access
• Rent it
• Subscription (NYT.com)
• Give it Away
• Advertising (Yahoo portals or infomediaries)
• Direct marketing leads

10
Marketplaces / E-commerce

• Entities buy products directly from you (Amazon,
  Dell)
• Seller pays (eBay, Classifieds)
• Seller buyers pay for access (Match.com)
• Buyer pays (Buying Clubs)
• Affiliate programs others link to you (Amazon)
• Build your own marketplace for the savings (auto
  companies)
• Sell the software services to build
  marketplaces (Ariba, CommerceOne)

11
Services

• Sell it
• Per transaction (brokerage, on-line photos, etc.)
• Rent it
• Subscription (AOL)
• Give it away
• Lead generation (but for what?)

12
Support

• Per incident
• Package of calls
• Yearly maintenance contract as of purchase
  price
• Flat fee for yearly contract
• Different prices for different tiers of support

13
How do you transition models?

• Carefully
• Thoughtfully
• Just once, if you can

14
An Example

• Great technology in a competitive market
• First Decided to become a software marketplace
• After market crash Became a services supplier to
  one end of the marketplace
• After the 12/00 Went back to being a software
  service or product for which companies will pay